On producing (OG) Saab 9-5s in China

I hinted at this story from the first day of the Frankfurt Motor Show and there have been some articles on the web in the last few days in support of it.
Saab China.jpg The story is is this: that Saab, fresh with a new Chinese connection, might look to produce the older generation Saab 9-5 in China once they get the new generation Saab 9-5 up and running in Trollhattan.
Sounds like a good re-use of resources, eh? A win-win for everyone.
It could well turn out to be a win-win if it goes ahead, but Saab/Koenigsegg will have to listen to their Chinese partners and play the marketing of this vehicle very carefully.
One of our regular readers at SU, Ying, is originally from China and now lives in the US. He still frequents the Chinese car blogs and websites and wrote to me about what this situation could mean for Saab in China.

There are some reports on BAIC picking up the tooling of the GM9-5 and will start producing them in China (in fact I think you hinted it yourself).
This news has now spread to various Chinese Saab forums and the general feeling is very negative indeed. Saab owners are a special bunch wherever they are. The idea of an ultra cheap 9-5 produced locally (and possibly not up to the same standard in material and QC) flooding the streets does not sit comfortably with these people.
There is also the general consensus that it would be an insult of the Chinese people’s intelligence to dump an old (VERY old) platform on them, as if they can’t tell the difference between the new generation and the old. These people also appreciate a certain degree of exclusivity and anonymous quality associated with Saabs – many picked Saab over Audi and BMW exactly because it is NOT German.
These tactics works for a time in the past in China, witness the VW Santana, some old Golf etc, but it looks like the locals are catching up. When Mazda decided to continually producing the old 6, and sell it along side the new 6, the backlash was such that sales of both were seriously affected and they had to scramble to do damage control.
I remember Sony’s former chairman once commented the Chinese wanted products cheap and to last but maybe not at the cutting edge, well that was the 1980’s.
IMO the locals have purchasing power are now more savvy. In fact, they’re very conscious about being seen to have the latest and best (ask Bentley and RR and Merc how many Continental, Phantom and S class they sell and China’s market share ranking in the world). People are fairly materialistic and want to show off it seems.
I am sure the Chinese deal is beneficial to Saab, however, I hope in chasing short term cash flow they do not ruin their long term reputation, especially amongst enthusiasts.
I hope they do not repeat the mistake of SIAC and the Roewe 7 (Rover 75), SIAC assembled the 75 in China, re-branded it, and tried to push it as an alternative to the Germans. They have a rather embarrassing all English speaking advert campaign (in China…), a high price point and tried to use fancy buzz words like pure breed, aristocratic British design to lure in buyers, Well, the buyers saw through it and it ain’t pretty.
I have confidence (in their chances) if Saab treat their local customers with respect and do not patronize them. By establish mutual respect in customer/supply relationship, they will have a bright future in that huge potential market.

There are some really good thoughts there and I agree that Saab will need to do their market analysis properly. Hopefully someone at Saab is way ahead of us on this issue and they’re already considering this.
I think there’s some merit in the possibility of producing the older generation 9-5 in China, though. The key will be transperancy and honesty with the marketplace. If they give the model another name, for example, and position it as an introductory model rather than try and pass it off as a new model, I think it could be a success and an honest attempt at breaking into the market.
The customers that Ying mentions are very, very small in number (around 900 in 2008) and Saab need to expand that number in the hope of upselling them into newer models in the future.
As it stands now, their ability to sell newer models is going to be hampered by a lack of local production and the tax penalties the exist for imports. Right now, Saab just aren’t big enough to contemplate the investment required to produce current and new models there. The possible sale of the older generation 9-5 might be a key to getting to a size where that’s a possibility.
I’m pretty confident that the 9-3 would be outselling the 9-5 in China (in the last few years) by a very, very large margin. The number of customers you risk offending by offering the older 9-5 as a cheaper model with a strong safety and equipment list is therefore quite minimal.
It’s got to be a very tempting scenario for all concerned. I just hope that if they do it, they can do it right. As Ying mentions, this is a massive new market, growing stronger by the year. Saab’s local connections will give them a genuine advantage but they’ve got to treat the market with respect.

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